Correlation Between First Trust and EKAR
Can any of the company-specific risk be diversified away by investing in both First Trust and EKAR at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining First Trust and EKAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Dow and EKAR, you can compare the effects of market volatilities on First Trust and EKAR and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in First Trust with a short position of EKAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and EKAR.
Diversification Opportunities for First Trust and EKAR
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and EKAR is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Dow and EKAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EKAR and First Trust is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on First Trust Dow are associated (or correlated) with EKAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EKAR has no effect on the direction of First Trust i.e., First Trust and EKAR go up and down completely randomly.
Pair Corralation between First Trust and EKAR
If you would invest 20,169 in First Trust Dow on December 29, 2023 and sell it today you would earn a total of 384.00 from holding First Trust Dow or generate 1.9% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 0.0% |
Values | Daily Returns |
First Trust Dow vs. EKAR
Performance |
Timeline |
First Trust Dow |
EKAR |
Risk-Adjusted Performance
0 of 100
Low | High |
Very Weak
First Trust and EKAR Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with First Trust and EKAR
The main advantage of trading using opposite First Trust and EKAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, EKAR can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in EKAR will offset losses from the drop in EKAR's long position.First Trust vs. Vanguard Information Technology | First Trust vs. Technology Select Sector | First Trust vs. First Trust NASDAQ | First Trust vs. ARK Autonomous Technology |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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